Compute the geometric mean rate of return

Reference no: EM132142243

Question - The following are annual rates of return for U.S. government T-bills and U.K. common stocks.

Year	U.S. Government T-Bills	U.K. Common Stock
2003	.063	.150
2004	.081	.043
2005	.076	.374
2006	.090	.192
2007	.085	.106

a. Compute the arithmetic mean rate of return and standard deviation of rates of return for the two series.

b. Discuss these two alternative investments in terms of their arithmetic average rates of return, their absolute risk, and their relative risk.

c. Compute the geometric mean rate of return for each of these investments. Compare the arithmetic mean return and geometric mean return for each investment and discuss this difference between mean returns as related to the standard deviation of each series.

Reference no: EM132142243

Questions Cloud

What is the expected return and standard deviation : (a) What is the expected return and standard deviation of a portfolio that is 100% invested in the risk-free asset?

Find the probability that a given user is transmitting : Find the probability that a given user is transmitting. Suppose now there are three users.

How much interest is paid in the third year : Prepare a amortization schedule for a five-year loan of $71,000. The interest rate is 7 percent per year, and the loan calls for equal annual payments.

Issues of privacy and security in the new market space : Do you think that governmental or self-regulation is the best way to deal with issues of privacy and security in the new market space?

Compute the geometric mean rate of return : Compute the geometric mean rate of return for each of these investments. Compare the arithmetic mean return and geometric mean return for each investment

Why systems modeling is worth the time and resources involve : Suppose you are starting work on a project for an organization that has never used any modeling techniques or tools in designing a system.

Explain how individuals navigate organizational politics : Explain how individuals navigate organizational politics. Define leadership and followership.

Write a program that displays the tuition in ten years : Write a program that displays the tuition in ten years and the total cost of four years' worth of tuition after the tenth year.

Describe a sequence of stack operations : Describe a sequence of Stack operations that results in S storing all elements originally in T below all of S's original element.

User Account

All Pages